Defensive Stocks Bounce — Led Higher by Gold Stocks

For gold traders, it has been a long month of the ‘Trump-trade’ completely decimating their lives — disrupting their austere lifestyles with harrowing losses. In the shadow of soon to be great again America, gold stocks plummeted by more than 15% over the past month — knee capping an otherwise spoiled rotten investor base who’ve been enjoying magnanimous gains throughout 2016 — even though they’ve mostly done it under the pretext of waiting for an end of days scenario to unfold.

In addition to gold, bonds and anything defensive, like consumer staples, utilities and REITs got hammered — as Joe Blow blew his wad into high beta, psychotic energy, and aluminum stocks — gleefully and flippantly tossing money at bank stocks too because the yield curve blew out.

If only for today, the defensive plays are back in vogue, reminiscent of the days when the deflationary vortex reigned supreme and people, literally, feared for their lives and the future of their nation. Gold and silver stocks are higher by 4%, REITs by 2.5% Utilities by 1% and Goldman is down 1.6%.

Recent underperformers in the biotech space are participating in the rally — as a general malaise wistfully sweeps through Wall Street — exuberant about any and all best case scenarios. Traders, as always, are ignoring all of the negative aspects of sharply higher sovereign borrowing costs and an administration whose central campaign promise was to bring China to its knees — reversing decades of unfair currency manipulation and one sided trade deals. Judging by the sharp rise in basic materials, especially copper, none of that is being priced into stocks.

Once again, Trump is not being taken seriously.

If recent history is of any use, investors will soon learn about the seriousness of Trump’s policies and how upsetting the apple cart isn’t exactly a seamless transition into mindless rallies — based solely on hope.